Sears Faces Class Action by Hometown Franchisees

In the following article covered by News 680 is the announcement that Sears is now facing class action by its Hometown Franchisees.  The Franchisees are going to go after Sears for failing them in the following ways:

  1. For competing against them in their territories
  2. For lowering local advertising budgets
  3. For dictating conditions
  4. For eroding Franchisees’ profits by corporate decisions that are not in the Franchisees’ favour

The following quote from the article summarizes the Franchisees’ situation:

“We are tired of disappointing our customers because we lack the resources to serve them properly,” – Jim Kay

The VCSFA has heard countless stories of situations where Franchisees – specifically coffee shop franchisees – have been unable to provide the right product at the right price, or, been unable to provide a consistent brand experience to meet the customers’s expectations that the customer is expecting before he or she enters their place of business.

It is paramount that the prospective buyer of an existing or new franchise investigate the ‘atmosphere of support’ experienced by existing franchisees.  A lot of Franchisees could have protected themselves against complete financial ruin, family hardship, or worse – had they only probed the managers or Franchisees of existing stores.  This is *completely free* and most Franchisees, given enough time and in the atmosphere of trust, will divulge all their good and bad feelings they have about the Franchisor which is one of the most valuable pieces of investment information you can obtain.

No matter what kind of franchise you plan to purchase, do your homework before you purchase. Multiple locations is not always an indication of a successful franchise.

As always, don’t hesitate to contact the VCSFA should you have any questions.

 

Waves Coffee Location Introduces Two-buck-per-hour Minimum Seat Charge

That’s a buck per cheek per hour – not bad!

We apologize for the low image quality but it was taken by someone in the public who thought we’d be interested in covering it.  Here is what the text on the sign reads:

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DEAR VALUED CUSTOMERS

In recent weeks we have received many “Customer Comments” regarding “Waves” never having seats available and some customers staying for long periods of time without purchasing anything.

To ensure more customers have a chance to enjoy our facility, there is now a $2.50 per hour, per seat minimum charge

Thank you for your continuous support!

Waves Coffee

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No one understands this Waves Coffee location franchisee (owner) more than the members of the VCSFA do.  It’s the message behind the sign that most people out there will never understand.  Within the lines of the text of this sign is found the foundation of the VCSFA.

If this sign were found at an independent cafe, it would be understandable.  The customer would think “Mario is having a hard time with cheap, abusive college students in his cafe so he’s going to get rid of these freeloaders with a butt-cheek penalty – ingenious!”  In fact, he’d probably get a lot of positive press for that.

But this isn’t an independent.  It’s a franchise – And a big one in Vancouver.

Customers of this location will look at the sign and say to themselves “That’s weird.  I’ve been to many other Waves and I haven’t seen this rule before.” Or, “McDonalds is a franchise and they don’t do this.”  And they will leave thinking somewhat less about the brand because of this inconsistency, even if it’s subconscious.  They will start thinking of this location more of an independent than a chain.

But what drives this inconsistency?  Why would this franchisee feel strongly enough to put this kind of sign up?  You can be sure the franchisor does not know about this yet.  It would not be there if they did.

Profit.  They aren’t making enough.  It’s that simple.

This franchisee of this location isn’t making as much money as he or she feels they ought. If the money was flowing in, they wouldn’t be too worried about the freeloaders. If you don’t believe us, go and test us it for yourself and ask.

So, from the street the cafe looks full – so full that there aren’t enough seats.  Yet the franchisee had to put this sign up?

Waves Coffee has a particularly punishing business model which you will soon see more and more franchisees rebelling against.  They would like all their stores to be open 24/7 and have unlimited and free WIFI for their ‘customers’.  Does anyone see the flaw in this business model yet?  Maybe the sign above in the photo might shine some light on it.  At least with Blenz they ask their franchisees to use a non-free but fairly innovative system of marketing that’s attached to the WIFI system which gives the franchisee some control over the length of connection.

But Blenz has its own questionable ‘programs’ for their franchisees.  One such example is their ‘Free Birthday Drink’ that they desperately try to get their new franchisees to adopt. It sounds great from the customers side but… oops!  They forgot to force a minimum order with this free drink (and this ain’t just a regular drip coffee – it’s ANY drink!) so the franchisee soon learns that if they participate they are buying free drinks for every Tom, Dick and Harry around town.  You read that right!  Just walk in, say ‘it’s my birthday’ and walk out with a drink paid for by the owner of that Blenz because head office doesn’t offer any compensation to the franchisee when they do this for the sake of the brand – straight loss of goods out the door. Needless to say that participation in this program has not had great success across the chain.  If you want to try this out for yourself, we recommend the Library Square location – the operators of this location always give it away for free with a smile.

So then what can a franchisee do?  The franchisor should have been there to help this franchisee address their issues and support them to come up with a system to overcome these challenges so that it doesn’t appear to the customer as a brand inconsistency.  Since this franchisee is not a member of the VCSFA, they wouldn’t have access to our vast resources and may not even know that a WIFI system exists out there that could help them overcome this.  WIFI and freeloaders is a commonly discussed topic amongst our members and innovative idea sharing has lead to improvement in this area.

Where is the franchisor?  Why is the franchisee forced to seek outside of their chain to stop the bleeding?  Where are the ears to hear and the hands to help? Why are they spending over 7% of their revenue on royalties only to end up running their shop like an independent and having the public look at it that way? Franchisees expect a certain amount of support for this royalty yet in many cases they are left to figure it out on their own.

We hope that this Waves owner has great success with their butt-cheek-penalty program. I’m sure every VCSFA member would love to institute it themselves! We hope the freeloaders go abuse someone else, as well. But more importantly, we hope that this franchisee will join the VCSFA and dozens of others who also had nowhere else to turn and need that edge of support to better their future.

Until then, I think I just used $5 worth of butt-space writing this so I better sign off.